There are a couple different ways to knot your thread when finishing it on the back of your hoop. When I'm embroidering, I use two different types of knots. The first, I often refer to as a woven knot (not a technical term, just what I call it) and the other is a slip knot.
Here's a video on how to do the two different knots and below are step by step instructions for each knot.
Woven knot
When your thread is down to about 2x the length of your needle, it's time to finish it off on the back of your embroidery. If you thread is shorter than this, it can be hard to maneuver your needle under your stitches, so when in doubt, more thread is better. Start by gliding your needle underneath some of the stitches on the back of your embroidery. Then pull the thread through. Next glide the needle under different stitches in a different direction. Do this two or three times so that the thread will knot on itself within the back of your embroidery. When you're finished, trim away the excess thread. Now you shouldn't even be able to tell where your knot is. I like this knot, because it keep the back a little cleaner.
Slip knot
I usually only use the slip knot if it's hard to weave my needle in the area I need to make the knot (think tiny hoops or close to the edge of the hoop) or if the back of the embroidery will get a lot of wear or friction. Similar to the woven knot, the slip knot also needs a bit of thread (about 2-3 inches) to make the knot. Start by making a loop with the embroidery thread. Bring the needle through the loop. Press where the thread cross to the back of your embroidery and gently tug. By pressing down gently on the crossed thread, you're keep the knot flush with the fabric. If there is room between the knot and the fabric, you might find your stitches loose on the front of the fabric. When using a slip knot, I usually do 2-3 knots on top of one another. Once done, trim away the extra thread. This knot is great if you're working is a tight area, like a 3 inch hoop, or near the hoop edge.
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